COLONY CAPITAL SMARTER THAN ALL OTHER DEVELOPERS?

Implications: XANADU has been shopped around to every mall developer in the industry. They all turned it down as being either too risky or too expensive or both.  Along comes Colony and ups the price that all the "pros" turned down. WOW!

While I agree with Mr. Burns that this sale removes a huge Albatross around Mill's neck, I cannot agree with his view that Mills is now on the road to better days.

Analysis: Although this article is written from the standpoint of the Colony-Mack transaction, it is equally relevant to examine it from its relevance to Mill's future.

From the perspective of Colony, my comment is that I was one of those observers who believed the deal was badly overpriced before the cost overruns almost doubled the cost.There are many reasons for my belief but none more important than the notion that I have yet to see any mixed use development of this type that has enjoyed success! Mall of America took five years to get in the black and they had some of the strongest anchor stores imaginable. None of the really strong anchors have expressed any interest in Xanadu so all they will have is a mixed bag of second string retail and entertainment to compete with three of the strongest malls in the state located within 3 miles.

From the perspective of Mills, my comments are hopefully well known to the GLG reader by now.  Until the SEC reveals exactly what their concerns have been about Mill's accounting, no one really knows what the company is worth or what problems they face going forward. My own guess is that most analysts have badly overstated the values of many of the recently acquired malls in their portfolio.

I would reserve judgement until some of the prospective buyers have a fair chance to examine Mill's restated books.